Generalized social anxiety disorder (GSAD) is characterized by aberrant patterns of amygdala-frontal connectivity to social signals of threat and at rest. The neuropeptide oxytocin (OXT) modulates anxiety, stress, and social behaviors. Recent functional neuroimaging studies suggest that these effects are mediated through OXT’s effects on amygdala reactivity and/or amygdala-frontal connectivity. The aim of the current study was to examine OXT’s effects on amygdala-frontal resting-state functional connectivity (rsFC) in GSAD patients and healthy controls (HCs). In a randomized, double-blind, cross-over design, 18 GSAD and 18 HC participants received intranasal OXT (24 IU or 40.32 μg) or placebo (PBO) before resting-state functional magnetic resonance imaging. In individuals with GSAD, OXT enhanced rsFC of the left and right amygdala with rostral anterior cingulate cortex (ACC)/medial prefrontal cortex (mPFC), and in doing so, reversed (ie, ‘normalized’) the reduced amygdala-frontal connectivity observed relative to HCs evident on PBO. Higher social anxiety severity in GSAD subjects correlated with lower amygdala-ACC/mPFC connectivity on PBO and higher social anxiety also correlated with greater enhancement in amygdala-frontal connectivity induced by OXT. These findings show that OXT modulates a neural circuit known for social threat processing and emotion regulation, suggesting a neural mechanism by which OXT may have a role in the pathophysiology and treatment of social anxiety disorder.